Abstract
Renewable sources are taking center stage in electricity generation.
However, matching supply with demand in a renewable-rich sys-
tem is a difficult task due to the intermiŠent nature of renewable
resources (wind, solar, etc.). As a result, Demand Response (DR)
programs are an essential part of the modern grid. An efficient
DR technique is to devise different pricing schemes that encourage
customers to reduce or shift the electric load.
In this paper, we consider a market model for DR using Block
Rate Pricing (BRP) of two blocks. We use a utility maximization
approach in a competitive market. We show that when customers
are price taking and the utility cost function is quadratic the result-
ing system achieves an equilibrium. Moreover, the equilibrium is
unique and efficient, which maximizes social welfare. A distributed
algorithm is proposed to find the optimal pricing of both blocks
and the load. Both the customers and the utility runs the market.
The proposed scheme encourages customers to curtail or shift their
load. Numerical results are presented to validate our technique.